Drop-shipping for eBay and Amazon

If you’re a seller on eBay or Amazon, you might have considered
drop-shipping at some point. However, many sellers don’t really understand the nitty-gritty of drop
shipping.

It’s important for, particularly small sellers, on eBay and Amazon to understand the business of drop shipping
so that they are able to easily identify drop shippers that will meet their specific selling needs.

What is drop shipping?

Simply put, drop-shipping is selling products that you do not own. It might sound illegal at first but it is
not.

Drop-shipping companies (drop-shippers) are ones which own
merchandize for sale and will directly ship it to your customers once it has been paid for.

How it works on eBay and Amazon

• You search for and find a supplier that agrees to drop-ship. They allow you to list their merchandize on
the auction site or Amazon, or your own website without buying it first.

• When someone buys the item, you collect the retail price and shipping costs from them.

• You then send the wholesale price plus the handling and shipping fee to the drop-shipping company.

• The drop-shipper then ships the order directly to your customer.

• The difference between the retail and wholesale price is your profit.

Benefits of drop-shipping for eBay and Amazon

• You don’t have to make an up-front investment for the
products – when you sell items by drop-shipping, you do not have to pay for the items until they are
bought. Therefore, your money will not be tied up in inventory.

• Minimizes risk – the only risk for a seller are the listing fees in case items don’t sell.

• Variety and product depth – buying products to re-sell by paying cash limits you on variety and
quantity you can purchase because it is the amount of cash or credit that determines what and how much you buy.
With drop-shipping however, you can list as many items as you want.

Drop-shipping drawbacks

• Limited control – as a seller, drop shipping limits the amount of direct control you have over the
merchandise – in terms of packing, shipping and generally handling. Any poor service by the supplier, such as
improper packaging, delayed shipping, among others, negatively affects your eBay and Amazon customer satisfaction
ratings.

• You don’t have control over inventory – when a supplier doesn’t notify you in time about their low
stock, you risk selling an item that will not be delivered. This puts your seller status on eBay and Amazon in a
very awkward position and if it happens quite often, your account could be suspended, if not closed.

Types of drop shippers

These are basically two and you ought to understand the difference between the two types.

• Aggregators: drop-shipping aggregators (Drop-ship Warehouse Companies) are essentially middlemen.
They do heavy advertising on the web claiming to have a range of products on sale. The products they list are in a
virtual warehouse, they don’t own any stock. Generally, it is not easy to make a profit on eBay or
Amazon with this type of drop-shipping.

• Manufacturers and master distributors: these are actual product manufacturers who offer shipping
services as well. Some do the shipping themselves and others use master distributors. You can make much more profit
when you work directly with this type of drop-shipper.

As a seller, you need to evaluate your specific situation on eBay and Amazon to be able to decide which type of
drop-shipper to work with.